Giroux v. Federal National Mortgage Association et al
Filing
17
///ORDER granting 5 Motion to Dismiss for Failure to State a Claim. So Ordered by Judge Paul J. Barbadoro.(jna)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
Sharel L. Giroux
v.
Case No. 14-cv-58-PB
Opinion No. 2014 DNH 135
Federal National Mortgage
Association, et al.
MEMORANDUM AND ORDER
Sharel Giroux has filed suit against the Federal National
Mortgage Association (“Fannie Mae”) and MERSCORP Holdings, Inc.
She seeks (1) a declaratory judgment that Fannie Mae does not
hold rights in her mortgage or promissory note; (2) a permanent
injunction barring Fannie Mae from enforcing the note; and (3)
further discovery from MERSCORP.
Both defendants move to
dismiss on res judicata grounds.
I.
BACKGROUND
In January 2007, Giroux signed a promissory note with
American Home Mortgage Corporation (“AHMC”).
The note was
secured by a mortgage on her home held by Mortgage Electronic
1
Registrations Systems, Inc. (“MERS”) as nominee for AHMC.
On
November 19, 2008, MERS assigned the mortgage to Fannie Mae.
The written assignment purported to transfer both the note and
the mortgage.
Doc. No. 5-3.
Bank of America and BAC Home Loans
allegedly serviced the mortgage for Fannie Mae.
On August 30, 2011, Giroux sought a declaratory judgment in
Belknap County Superior Court that Fannie Mae, Bank of America,
BAC Home Loans, and MERS all lacked authority to enforce the
note.
She also sought a permanent injunction against all
parties attempting to enforce the note.
Among other things,
Giroux argued that “Ms[.] Giroux is unaware of contract or
agency by which AHMC appointed or authorized MERS to be Giroux
Mortgage mortgagee as AHMC’s nominee.”
Doc. No. 5-4.
On November 15, 2012, the superior court dismissed all
defendants save Fannie Mae.
Doc. No. 5-6.
On December 7, 2012,
the court dismissed Fannie Mae, the purported holder of the
note.
Doc. No. 5-7.
On October 10, 2013, the Supreme Court
affirmed both decisions.
Giroux subsequently received notice of a foreclosure sale
scheduled for January 7, 2014.
On January 6, 2014, she filed
this complaint and a motion for a temporary restraining order
and preliminary injunction against Fannie Mae in Merrimack
County Superior Court.
The complaint alleges that the mortgage
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Fannie Mae is seeking to foreclose is invalid because AHMC
lacked a sufficient relationship with MERS to permit MERS to
serve as its nominee when the mortgage was issued.
After a
hearing on January 14, the court cited Giroux’s “previous
opportunities to litigate issues arising from the respondents’
attempts to foreclose on the mortgage” in denying her motion for
injunctive relief.
Doc. No. 5-10.
On February 5, 2014, the
defendants removed the case to this court.
II.
STANDARD OF REVIEW
I analyze the government’s motion under the familiar
standard that governs motions to dismiss for failure to state a
claim.
Under this standard, a plaintiff must present factual
allegations sufficient to “state a claim to relief that is
plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
Res judicata is an affirmative defense that can serve
as the basis for a motion to dismiss but “dismissal can occur
only when facts that ‘conclusively establish the affirmative
defense’ are ‘definitively ascertainable from the allegations of
the complaint, the documents (if any) incorporated therein,
matters of public record, or other matters of which the court
may take judicial notice,’ including the records of prior
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judicial proceedings.”
Sutliffe v. Epping Sch. Dist., 2008 DNH
076, 3-4 (quoting Banco Santander de P.R. v. Lopez-Stubbe (In re
Colonial Mortg. Bankers Corp.), 324 F.3d 12, 15-16 (1st Cir.
2003)).
III.
ANALYSIS
Fannie Mae argues that Giroux’s current claims are barred
by res judicata.
Res judicata precludes litigation “in a later
case of matters actually decided, and matters that could have
been litigated, in an earlier action between the same parties
for the same cause of action.”
157 N.H. 530, 533 (2008).
Sleeper v. Hoban Family P’ship,
For the doctrine to apply, “(1) the
parties must be the same or in privity with one another; (2) the
same cause of action must be before the court in both instances;
and (3) a final judgment on the merits must have been rendered
in the first action.”
Id. (citing Meier v. Town of Littleton,
154 N.H. 340, 342 (2006)).
The New Hampshire Supreme Court has
held that the “same cause of action requirement” encompasses
“all theories on which relief could be claimed on the basis of
the factual transaction in question.”
Brooks v. Trs. of
Dartmouth Coll., 161 N.H. 685, 694 (2011) (quoting E. Marine
Constr. Corp. v. First S. Leasing, Ltd., 129 N.H. 270, 275
(1987)).
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Giroux does not challenge either Fannie Mae’s contention
that the parties in both actions are the same or its claim that
both cases arise from the same factual transaction.
It is also
quite clear that the prior action went to a final judgment.1
Accordingly, the only issue that merits extended discussion is
Giroux’s contention that res judicata does not apply because New
Hampshire’s venue law barred her from litigating her challenge
to the mortgage in Belknap County.
Giroux bases her argument on the fact that New Hampshire
courts treat “local actions” differently than “transitory
actions” for venue purposes.
Local actions are defined at
common law as actions “aris[ing] out of a local subject,”
including “whatever is founded upon privity of estate,” whereas
transitory actions are “personal actions which might have arisen
in any county,” including “actions in . . . contract.”
The
Educ. Soc’y of the Denomination Called Christians v. Varney, 54
1
Giroux argues that the final judgment requirement was not
satisfied because she never challenged the mortgage in the prior
action. As a result, she argues, res judicata does not apply
because there was no final judgment entered with respect to her
mortgage claims. This argument is based on a mistaken
understanding of the final judgment requirement, which applies
to the action brought rather than the specific claims that were
litigated in the prior action. This must be so because res
judicata could otherwise never be used to bar claims that were
not litigated but that could have been litigated in the prior
action.
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N.H. 376, 377-78 (1847).
Local actions involving property
ordinarily must be commenced in the county where the property is
located whereas transitory actions may be brought in any county
where either party resides.
N.H. Rev. Stat. Ann. § 507:9.
Relying on this distinction, Giroux claims that her challenges
to the note were transitory claims that were properly brought in
Belknap County where one of the named defendants was located,
but her mortgage claims are local claims that can only be
brought in Merrimack County, where the property is located.
Accordingly, she argues that her challenges to the mortgage
cannot be barred by res judicata because she could not have
raised them in the Belknap County action.
I question the premise that underlies Giroux’s argument.2
However, even if her underlying premise is correct, she cannot
escape the effect of res judicata by splitting her claims and
attempting to litigate some of them in Belknap County while
2
A claim challenging a mortgage is both a local claim and a
transitory claim because it can be founded either on privity of
estate or privity of contract. See Holyoke v. Clark, 54 N.H.
578, 579 (1974). Although an action to enjoin a foreclosure is
a local action that must be brought in the county where the
property is located, Tucker v. Lake, 67 N.H. 193 (1892), Giroux
did not seek to enjoin a proposed foreclosure in the prior
action. Thus, she could have brought claims for declaratory
relief challenging the validity of the mortgage as a transitory
claim in Belknap County together with her claims challenging the
note.
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reserving other claims for a later action in another county.
As
the Second Restatement of Judgments recognizes, when a plaintiff
elects to proceed “in a court which has jurisdiction to redress
an invasion of a certain interest of the plaintiff, but not
another . . . [t]he plaintiff, having voluntarily brought his
action in a court which can grant him only limited relief,
cannot insist upon maintaining another action on the claim.”
Restatement (Second) Judgments, § 24 cmt.g (1982); see also 18
Charles G. Wright & Arthur R. Miller, Federal Practice and
Procedure § 4412 (2d ed. 2002).
Giroux has provided no good reason why she did not
initially bring suit in Merrimack County, where her home was
located and where she was then living.
Because she clearly
could have brought all of her claims in such an action, she
cannot avoid res judicata by arguing that her decision to
proceed in Belknap County prevented her from being able to
present her challenges to the mortgage in that action.
All of Giroux’s current claims involve matters that have
actually been decided or that could have been litigated in the
Belknap County action.
See Sleeper, 157 N.H. at 533.
The
initial suit involved the same parties and the same cause of
action.
It was decided on the merits by the Belknap County
Superior Court and the trial court’s rulings were affirmed by
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the New Hampshire Supreme Court.
Accordingly, all of the
current claims are barred by res judicata.
IV.
CONCLUSION
For the reasons discussed above, I grant the defendants’
motion to dismiss.
Doc. No. 5.
SO ORDERED.
/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
June 16, 2014
cc:
Michael J. DiCola, Esq.
Thomas J. Pappas, Esq.
Gary M. Burt, Esq.
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